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Spotlight Article

Azerbaijan and International Financial Organizations

Azerbaijan American Alliance
May 11, 2015

The role of international financial institutions in Azerbaijan’s economic growth increases with each year, as the country continues to exceed expectations. The country’s success stems from successful collaborations with institutions with the World Bank Group, the Asian Development Bank, and the European Bank for Reconstruction and Development where projects range from energy dependency to promoting the establishment of local business owners. These financial institutions are a positive indicator that Azerbaijan has become a major player in the international markets, and investing in the prosperity of the nation is profitable.

In 2014, the European Investment Bank (EIB) invested €25 Million Euro that supports small and medium enterprises. The investment looks not only to strengthen the private sector and provide jobs, but also to improve the standard living conditions for the overall population. Azerbaijan’s AccessBank was the recipient of these funds, as the bank has been an approved institution for lending outside of the European Union and coincides with the objectives of EIB. This is the first loan that the bank has received, and a framework agreement was reached for lending operations to occur.

Azerbaijan’s relationship with the Asian Development Bank (ADB) was established in 1999, in which the financial organization has awarded more than $2 Billion USD in grant projects. Within that funding, a major component of Azerbaijan’s economy stems from the extraction/production of fossil fuels. As Azerbaijan is largely dependent on oil and gas reserves, it is important that financial institutions worldwide are taking an interest in the country’s prosperity. In 2013, the country recently received an upgrade to Category C status for a developing member country based on the economic growth. In 2014, ADB outlined a country partnership with Azerbaijan that details a strategy of how to improve infrastructure development, environment stability, poverty reduction, and capacity development over the span of four years. In 2015, ADB approved $120 Million USD for three financial institutions in Azerbaijan that will be invested in the development of the agricultural sector and provide financial services for small and medium enterprises.

As continued progress is made with providing financing to small enterprises in Azerbaijan, there are several financial organizations that are taking an interest in providing funding for new development and targeting specific businesses. In a partnership with the European Bank for Reconstruction and Development (EBRD), their funding provides financial access to women-owned-and-run businesses while promoting direct competition for the business environment. Additionally, EBRD also provides funding for energy projects that ensure the stability in one of Azerbaijan’s most valued resources. With a total investment of €2 Billion Euro, the EBRD has provided funding to 64% of the private sector and more than 150 projects in Azerbaijan.

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